Separately, Bennett acknowledges concocting a process for forgiving some homeowner obligations. State officials are concerned that the process constitutes an improper incentive for homeowners to sign with a particular company.

Now, he is among the hundreds of contractors scrambling to sign up homeowners who are receiving money from the state's $750 million Hazard Mitigation Grant Program. The program offers homeowners who got Road Home rebuilding grants up to $100,000 to lift their houses to federally mandated levels.

Advance grant checks go to homeowners and their contractors, jointly, to ensure the money is spent on elevating. But the work can cost as little as $60,000 or $70,000 to complete, making it worth contractors' while to pay thousands of dollars to sign up homeowners.

Bennett acknowledged paying for contracts that Davis told him were transferred to him by contractors who had a backlog of jobs.

"We worked together somewhere short of six months," Bennett said. "After his recent well-publicized trouble with the law, we broke off the relationship."

Davis' lawyer, Eric Torres, could not reach Davis for comment late Monday, but said Davis and Bennett had a business relationship. He said Bennett's lawyer, Bob Ellis, accompanied Davis when he turned himself in.

State spokeswoman Christina Stephens said the state is looking at the legality of purchasing elevation contracts.

"In the event that we find any wrongdoing, we are going to be banning contractors from the program," Stephens said. "We do not want any homeowners to be taken advantage of."

State officials have already said they're concerned that lists of approved grantees have leaked to contractors, who use the information to solicit jobs. A lawsuit in Baton Rouge accuses a state official of selling the list for profit.

Bennett said he has been looking for such a list, but hasn't seen one. But what Benetech got from Davis was even better -- 50 contracts in hand.

In wooing additional customers, Bennett sought a way to excuse some homeowners from having to use the $30,000 Road Home elevation grants most received in 2008 on the elevation work. Many of them had already spent the money on other things.

Bennett sent an email message on June 30 to several business partners and his lawyer and close friend Ellis, just as Ellis was leaving his job in the New Orleans city attorney's office. The message outlines Bennett's proposal: A new company called Grant Resource Advisors will get homeowners to sign promissory notes to pay back their spent Road Home grants; the company will then immediately forgive the notes. In exchange, homeowners will sign over to Grant Resource Advisors power to endorse their grant checks. They will also allow the company to claim portions of other public grants and tax credits they might get -- for such measures as weatherization, solar power and storm-proofing.

In the email, Bennett warns Grant Resource Advisors' owners Tom and Lisa Neyhart and others copied on the email: "I DO NOT WANT ANYONE to call anyone to ask opinions about this process." He then assures them the state "has no authority over this agreement and they don't want any authority."

Stephens, the state spokeswoman, disagreed with that claim. "We have authority over what is and is not allowed in the program we administer," she told the newspaper.

After The Times-Picayune provided the state with a copy of the email message and attachments, they were turned over to the attorney general, Stephens said.

Late Monday, Stephens said the state suspended Benetech and Grant Resource Advisors from collecting any new advance grant payments pending the results of that probe.

Tom Neyhart, a partner of Bennett's in other ventures, said Grant Resource Advisors has not done any of the things Bennett suggested. He said he has tried, without success, to talk to state and program officials about letting homeowners pay off promissory notes by signing over "green" grants.

He said Bennett hasn't been involved in Grant Resources Advisors, although the firm subleases office space from Benetech.

Bennett said he wanted to be involved but was not able to "because of my radioactivity in the media."

Among the others copied on Bennett's email was Cajun Elevation owner Praveen Kailas, who started a similar one-stop grant management and marketing firm called Louisiana Grant Management during the summer.

He said his company and Benetech were its only clients, and he shut it weeks later because he wanted to dissociate himself from Benetech.

Kailas said he doesn't know why he was copied on the June 30 email and claims he didn't read it until a reporter asked him about it Monday. He said he turned over documents related to Benetech to authorities.